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When Picassos Go Missing, Tax Liabilities Are Found

The situation is best related through a series of verbless sentence fragments: A wealthy family patriarch in a coma. $250 million of famous art - paintings by Monet, Picasso, Renoir, Velazquez - secretly stashed in Switzerland, the Cayman Islands, the Bahamas. A private jet. A private castle near Paris. A 75,000-acre ranch in Kenya. Scandal. Tax evasion.

Sometimes, real life is the stuff of soap opera.

In a story splashed all over the French media, which has dubbed it "Dallas on the Seine," a wealthy heir is on trial for tax evasion of gargantuan proportions. Guy Wildenstein, 70, son of wealthy art dealer Daniel Wildenstein, is accused of hiding his father's assets in complex trusts and undertaking other extreme means of avoiding inheritance tax since his father slipped into a coma in 2001. The family - always very secretive about its holdings - says the total estate is worth $60 million; the Associated Press puts it at $1 billion. Wildenstein fils faces heavy fines and up to 10 years in prison.

A Lesson In Estate Planning

When Wildenstein pere fell into a coma, it was clear he had not taken steps to protect his heirs from a heavy tax burden on the inheritance he left behind. Indeed, it was not long before the family faced up to $600 million in tax liabilities.

How can wealthy individuals plan their estates to safeguard both their assets and their heirs? A few methods are listed below:

  • Estate freezing - An estate owner transfers assets to the beneficiaries without tax consequences. This is often done by transferring assets to a company in exchange for preferred shares.
  • Strategies to avoid heavy taxes - You can take advantage of strategies such as generation skipping, spousal exemptions, valuation discounts, and charitable gratuitous transfers.
  • Incapacitation planning - In the event you become incapacitated, you want to ensure that you have taken the necessary steps to protect your inheritance. To that end, you should appoint a durable power of attorney, healthcare power of attorney, HIPPA release agent, complete a living will, create a revocable trust, and create a guardianship declaration.
  • Create a living trust - It's more expensive upfront, but it will avoid the time and costs associated with the probate process.

Not surprisingly, estate planning becomes very complex for wealthy individuals. There are myriad ways to funnel assets so the tax burden will be lessened and disbursement costs will be reduced. As such, many find that retaining an experienced estate planning attorney is essential.

In Progress

After much delay, the Wildenstein trial finally got underway last month. Guy Wildenstein contends that he is not liable for the taxes recovered. Whatever the outcome, the United States Internal Revenue Service also plans to pursue legal action in connection with $250 million in artwork that was quickly moved out of New York when the father, Daniel, fell into his fateful coma.

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